Crime and Growth Convergence : Evidence from Mexico

Download

Published

Journal

Author(s)

Metadata

Abstract

Scholars have often argued that crime
deters growth, but the empirical literature assessing such
effect is scarce. By exploiting cross-municipality income
and crime data for Mexico -- a country that experienced a
high increase in crime rates over the past decade -- this
study circumvents two of the most common problems faced by
researchers in this area. These are: (i) the lack of a
homogenous, consistently comparable measure of crime and
(ii) the small sample problem in the estimation. Combining
income data from poverty maps, administrative records on
crime and violence, and public expenditures data at the
municipal level for Mexico (2005-2010), the analysis finds
evidence indicating that drug-related crimes indeed deter
growth. It also finds no evidence of a negative effect on
growth from crimes unrelated to drug trafficking.